From the “when will they ever learn” file comes broad legislation from Republicans on the House Financial Services Committee. As approved in a party-line vote, the bill would start to dismantle the provisions of the Dodd-Frank law enacted by Democrats following the 2008 financial collapse, a near-Depression in the American economy.
The Great Recession was a product of the mortgage-lending crisis, but also of a lack of regulation on Wall Street and an almost total absence of protection for average American consumers. The financial industry had run without reins, and thus had run wild, making megamillionaires of the gamblers on Wall Street and near-paupers of average consumers who saw their 401K retirement plans decimated and their jobs and benefits diminished.
Into the breach came Democrats, who passed laws aimed at protecting consumers and at last, pulling the reins on speculators and quick-buck money managers. The Dodd-Frank law was the center of it, and it was good law. In time, despite cries from Wall Street that the rules would slow the economy to a crawl, the Dow Jones roared back, and credit card companies and banks knew the new Consumer Finance Protection Bureau was watching.
But the GOP bill now going to the full House would start to break up Dodd-Frank, ultimately simply returning the country to the days of little regulation, which is exactly what a high-roller president with multiple bankruptcies in his own business career wanted. President Trump at one point argued for deregulation because he said friends of his were having trouble getting loans.
As for the Consumer Financial Protection Bureau, which safeguards consumer interests against predatory credit “deals” taking advantage of consumers? Republicans would gut the agency, taking away any regulatory authority and even preventing the CFPB from having programs to educate and warn consumers.
In other words, and frightening words, the country would head back to the pre-Great Recession days of lousy and nonexistent regulation, and the likelihood of another Great Recession, or worse, would dramatically increase.
“This bill is rotten to the core and incredibly divisive,” said Rep. Maxine Waters of California, a Democrat. Waters also said, and Americans must hope she is right, that the measure has “no chance” of becoming law because the Senate Republicans have a smaller majority.
Virtually all of the dire consequences the big financial houses (some of them bailed out by taxpayers, remember) predicted would result from more regulation didn’t come to pass. Under President Obama, the auto industry came back from near-death, and the financial markets boomed. Many didn’t recover all of what was lost in the Great Recession, but 401Ks did come back, and millions of jobs were created.
This legislation is a straight-out bow to big banks and lenders. It hands the gamblers in New York the dice again, and the pot is the country’s financial stability. If the big-money crowd on Wall Street includes the geniuses Trump seems to think it does, then how did they manage to steer the country into near-collapse in 2008?
The big culprit was a lack of oversight, and Republicans know it even if they now don’t want to admit as they charge ahead to please the deep-pocket contributors who helped them win back the Congress. The American people know this, and must make their feelings known to the senators, Republican and Democratic, who now stand as the last line of defense against potentially disastrous changes in financial regulation.